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Around the world in 30 days, 7 retail stops along the way

September 4, 2012 by Chris Petersen — Owner, IMS

I'm convinced that you don't plan an around the world trip ... they just happen. I get an amazing opportunity to deliver IMS Retail University workshops around the world. It's not often that you get to go out and compare retail in seven very different cities: Sydney, Seoul, Singapore, Johannesburg, Amsterdam, Istanbul, and Dubai. The only challenge with this travel schedule is managing to blog along the way. The forthcoming blogs will hopefully have more pictures, and allow me to share first impressions from a retail point of view.

Worldwide retail comparisons for technology focused retailers

My background is the tech sector. And not surprisingly, this series of Retail U workshops is focused on retailers selling technology. It will be a fascinating opportunity to get glimpses of how similar and different the retailers are worldwide. I expect to see differences in size and format of retailers, but the retail business issues don't appear to be all that different.

In preparing for the Retail U workshops, we solicited some background information and asked the participants for issues and concepts that they would like to see covered. While there were a very few esoteric issues, the list of challenges and business issues sounds very familiar:

• How to compete with the internet
• How to combat showrooming and grey market goods
• What are the best practices in retail consumer experience
• How to leverage services to grow market basket and profitability
• How to grow, or at least sustain traffic and some consumer loyalty

First stop – Sydney Australia

Let me share a few observations of retail from my brief visit in Sydney. While I did visit a number of stores, the observations were from a very limited sample and time. It is literally a bird's eye view snapshot of technology based retailing from one major city in Australia.

Office Werks – Guaranteed to beat anyone's price

As you might guess from the name, it is a retailer of the office warehouse format. It is similar to an Office Depot or Staples. They obviously focus on printers, ink, furniture and high margin consumables for the office. But, as you can see from the photo, it is a very basic format. Not a lot of merchandising ... and a lot of dump bins.

Office Werks: With computer tables and lots of office consumables

Office Werks: With some computers, but a lot of office supplies

I have never seen a retailer so blatantly go after low price. In their lobby, they post competitor ads and show where they are lower on price. They also post a large sign that they will beat anyone's price by 5%. Clearly, they are claiming price as their differentiator. However, they too, have some challenges with meeting prices on the internet. But for the most part, Office Werks seems to have captured the DIY (Do It Yourself) shopper, who wants a good deal on paper, tablet or a computer.

Office Werks: Posting better prices on competitor ads and lower price guarantee

Bing Lee – THEE Price Negotiator

Just when you thought that it couldn't get any lower on price from Office Werks or Emart (comparable to Walmart), along comes Bing Lee. Their sign says it all:

Bing Lee literally challenges you to come in and haggle for a better deal. Definitely not for everyone!! But, Bing Lee does sell electronics and people do shop there. Perhaps, they enjoy let's make a deal.

Bing Lee: Where everything is negotiable!

Clearly, Australia has plenty of retailers staking a claim to be lowest price, and even one that is challenging you to come and get your own best deal. Where do you go as an Australian consumer to get a good selection and some assistance with your purchase?

JBHiFi – Moving tons of media and now computers

When I visited JBHiFi about 4 or 5 years ago, there wasn't a computer in the store. There were tons of DVDs and CDs, and there still is! No US store begins to carry this much media. Aussies seem to buy movies, because the bandwidth is generally not good enough to watch streaming movies or download them. So, JBHiFi sells them ... lots of them and games.

JBHiFi: A store with lots of media and deals

The unique aspect of this format is that media drives TRAFFIC. Just try to get into the JBHiFi store in downtown Sydney at lunch hour! The store is packed with people and signs as you can see by the photo. But, JBHiFi has come a long ways and is now stocking hardware ... including tablets and computers. At least for the consumers shopping JB, the experience must be good enough, because JBHiFi is going to be selling almost as many computers as Harvey Norman, who has been the dominant market share leader. The other amazing stat is that JBHiFi sells almost triple the revenue per sq. meter than Best Buy does.

JBHiFI: Flagship store focused on technology and experience

While most JBHiFi stores look like the former photo, the photo above is of their new flagship store. Not surprisingly, it is very near the Apple flagship store and the new Samsung flagship store. This store's planogram rivals anyone in terms of range and the potential for engaging consumers.

Go Harvey Norman Go – Interesting mix of furniture and technology

Harvey Norman is notorious for blasting ads in your face ... always with the slogan "Go Harvey Norman, Go Harvey Norman, Go". Well, Harvey Norman seems to be going more towards higher margin furniture. At least in the stores I visited, it looked like they took as much tech space as possible and converted it to higher margin white goods and furniture.

Harvey Norman: A store pushing deals and not much service

The one thing we don't see much in the US for retail stores is franchisee owners. The Harvey Norman store managers literally own their store. So, the good news is that they localize it. The bad news is that they localize it. As you can see from the photos, the store appearance, merchandising and the experience can vary greatly from store to store!

A newer Harvey Norman with clean computer tables and sight lines

Harvey Norman was my one hope to find a retailer with Geek Squad like services. Harvey Norman has a tech bench, but I defy you to find it. It is hidden in the back and primarily viewed as a problem resolution center, not a way to add value to the consumer and sell a more profitable market basket. It will be very interesting to watch and see if Harvey Norman continues to lose share if they don't find a way to differentiate value beyond the lowest price, like all of the other retailers in the market.

Harvey Norman: It's hard to find the tech bench...

At the end of the day, results count ... especially on the bottom line

Consumers are the ultimate measure, because they vote with their wallets. Not every consumer wants the same things. Clearly, some of them are voting for low prices online, and at retailers like Office Werks, Emart and even Bing Lee. The race to the bottom is in full swing and accelerating.

Yet, Apple stores are there, and Samsung just opened a flagship store in Sydney. So, there appears to be a major opportunity for tech retailers to step up and differentiate value beyond lowest price.

About Chris Petersen

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